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How to Switch Banks: A Step-by-Step Guide

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How to Switch Banks: A Step-by-Step Guide
Su Guillory
Su Guillory
Jul. 03, 20246 min read
Switching banks can be daunting, but sometimes it's necessary to find better services, lower fees, or improved customer support.

Whether you are dissatisfied with your current bank's offerings or seeking better financial opportunities, switching banks can seem cumbersome because you need to transfer accounts, update automatic payments, and navigate new banking procedures. 

However, this complexity can be simplified with a step-by-step approach and careful planning. Understanding the reasons behind the switch to online banking and having a clear guide can make the transition smoother, ensuring you find a bank that better suits your financial needs and preferences.

Starting the Process

Finding the right bank means figuring out what your personal money needs are. Making a list of the features your current bank isn’t giving you is a quick way to help you better identify what your current and future banking needs are. Getting them on paper lets you easily prioritize which banking features are most important to you. 

Ideally, you’ll be able to find all the bells and whistles you want in just one bank — and with low or no fees. 

If you don’t, though, there's no rule saying you have to have all of your accounts with a single bank, though that can certainly add convenience. For example, having your savings account at one bank can maximize your interest rate, and opening a checking account at a bank offering free checking can reduce monthly fees. Having your mortgage at a third bank could offer additional savings if it offers lower interest rates and features that better fit your personal situation.

If this sounds overwhelming, however, you might land on one bank that offers most of the things on your banking wish list. A unified approach simplifies financial tracking, reduces the need for multiple logins and passwords, and often provides perks like waived fees or better interest rates for maintaining multiple accounts. 

How to Find the Right Bank

Before you embark on the journey of changing banks, it's essential to pinpoint the ideal financial institution that aligns with your unique financial needs and preferences. Here’s how to do that easily and effectively:

Step 1: Selecting Your New Financial Institution

  • Evaluate your current situation: Take stock of your current banking environment and list the features you're missing or dissatisfied with. This exercise helps prioritize your requirements for the future.

  • Diversify your accounts: While consolidating accounts in one bank can enhance convenience, don't hesitate to spread your accounts across different banks to maximize benefits. For instance, you might opt for a high-yield savings account at one bank and a checking account at another with robust online and mobile banking options.

  • Consider location and accessibility: Assess whether physical branch locations and nearby ATMs are crucial for your banking needs. If you're comfortable with online banking, you can explore a broader range of options, including online-only banks with competitive rates and fees.

Step 2: Opening Your New Bank Account

Once you've identified your preferred bank, initiate the process of opening a new account with them. Some banks allow you to do this online, while others require a visit to a brick-and-mortar bank branch.

To switch banks as seamlessly as possible, be prepared to:

  • Provide required information: Complete the necessary paperwork and supply personal details such as your name, address, Social Security number, and a government-issued photo ID.

  • Know the minimum deposit requirement: Check the bank's minimum deposit requirement and ensure you have the necessary funds to meet it.

  • Inquire about a switch kit: Many banks offer a switch kit to simplify this process. Most switch kits offer account closure checklists, account opening instructions, automatic payment transfer forms, and contact information for any details you need help with. If your bank doesn't offer one of these, be prepared to do much of the legwork yourself. 

Step 3: Transition Planning

Prepare meticulously for a smooth transition from your old bank to the new one. Regardless of whether your new bank offers a switch kit or not, you'll need to make lists of the following:

  • Document Automatic Payments and Deposits: Compile a comprehensive list of recurring transactions, including automatic bill payments, subscriptions, and direct deposits, to facilitate their migration to the new account.

  • Bills on autopay. You'll need to prepare a list of bills that must be transferred to your new banks. This can include utilities, mortgage or rent, credit card payments, and any loans.

  • Automatic deposits. This includes your paycheck deposit, of course, but it could also include government benefits, pensions, alimony, and child support. 

  • Recurring subscriptions. Most people have streaming services and app subscriptions set up to pay through their checking account or debit card. 

  • Recurring transfers. Though less common, make note of any transfers you have set up, such as those to retirement or investment accounts. 

  • Miscellaneous. Most people have their bank accounts linked to other digital payment forms such as Apple Pay, Samsung Wallet, and Google Pay. 

Step 4: Transition Execution

Execute the transition process methodically to avoid disruptions to your financial activities.

  • Activate online and mobile banking: Upon opening your new account, download and enroll in your new bank's online and mobile banking services. This empowers you to manage your finances conveniently and securely from any location.

  • Update automatic payments and deposits: Using the lists you made in step 3, transfer automated credits, debits, and transfers linked to your old account to the new one, ensuring a seamless continuation of your financial dealings.

Step 5: Closing Your Old Account

Safely close your old account once you've successfully transitioned to the new one.

  • Allow for adjustment time: Wait to ensure all automated transactions have been successfully rerouted to your new account before closing the old one.

  • Closure procedure: Follow the closure procedure outlined by your old bank, whether via phone, written request, or an in-person visit. For your records, we request written confirmation of account closure.

  • Handle bank cards and checks. Don't forget to destroy any remaining checks and debit cards linked to our old account. 

Should I Switch Banks?

We’ve talked a lot about how to switch banks — now let’s cover why you might want to do so. 

Reason #1: You’re Not Happy

First, as a bank customer, it’s completely within your control to give your business to a bank that fully meets your needs. That means if your current bank consistently provides subpar customer service, is slow to respond to emails, or simply drops the ball when it comes to customer satisfaction, consider why you’d want to keep doing business with this bank.

Reason #2: You’ve Moved

You may be perfectly happy with the bank you’ve been using for years, but maybe you’ve moved to an area without a convenient location. If you do most of your banking online, you could make it work, though you might have to pay a fee to withdraw cash from another bank’s ATM.

Reason #3: You’re Ready to Go Online

The online banking industry is booming these days, and for most people it's not necessary to have a bank with a physical location anymore. Many online banks have low fees, or even free accounts, and because they’re digital first, they may offer more technological perks than traditional brick-and-mortar banks.

Reason #4: You Need Better Financial Services

It may be time to break up with your bank if it’s not offering everything you need regarding financial services. Maybe you’ve long had a checking account, and are ready to open a retirement account, but your current bank doesn’t offer one. Or maybe you’ve gotten serious about saving money, but your bank offers an abysmally low interest rate. 

With so many banking options out there, there’s no reason to stick with a bank that can’t deliver everything you need.

Reason #5: There’s Incentive to Change

Some banks offer great promotions to get your business, such as offering $300 when you meet certain criteria with a new account or charging no fees for a period of time. That alone could be the impetus for you to change banks but do look long-term. Will this bank offer what you need in three months? What fees will it charge after the promotional period is over?

Todd Stearn, Founder and CEO of TheMoneyManual.com, says: “It’s a smart idea to change banks when you realize you’re earning a very tiny amount of interest on your deposits and could be doing much better elsewhere. Currently, the national average savings account yield is just 0.57% while the top rates are over 5%.”

Exactly What You Need: Finding the Right Bank

The hardest part of this process might be deciding on your new bank, given the number of options available these days. You’ve got traditional banks with a physical presence and online-only banks to choose from.

Online banks have a lot to offer. Many charge lower fees than traditional banks or no fees at all, thanks to their lower overhead costs. And some may lure you in by offering higher-than-normal interest rates on savings accounts. Some may offer sign-on bonuses, credit reporting and budgeting tools, or other perks.

On the other hand, services may be limited with some online banks. If there isn’t a physical location, making cash deposits may not be easy, and ATM options may be limited.

Should you decide to open a new account with an online bank, consider the following:

  • How many ATMs are in the network, and are there fees to use other ATMs?

  • Does the mobile app allow you to deposit checks?

  • What fees will you be paying at your online bank?

You can discover the best online banks we’ve come across here, but here’s a snapshot of some you might consider:

  • Best for one-stop banking: SoFi

  • Best for connecting with a video banker: Bank5 Connect

  • Best for building your credit: Chime

  • Best for high-yield savings: Quontic Bank

You can search for banks with the top high-yield savings rates, and many of them will likely be online banks. Just make sure that the bank you choose is FDIC-insured so your funds will be protected.

Su Guillory
Written bySu Guillory

Su Guillory is an experienced business and finance writer now contributing to BestMoney. She’s written several business books and has been published on sites including Forbes, Nav, SoFi, and AllBusiness. She writes about business and personal credit, financial strategies, loans, and credit cards.

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